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Northwest to Cut 2,500 Jobs, Impose New Passenger Fees

July 9, 2008

By Katherine Yung, Detroit Free Press

Jul. 9–Northwest Airlines announced today it’s eliminating 2,500 jobs and will start charging fees on customers’ first checked bags and frequent flier award tickets.

Starting immediately, Detroit Metro Airport’s dominant carrier also plans to raise the fee for changes to domestic, non-refundable tickets from $100 to $150. The fee for changing an international ticket will increase by $50 to $150, depending on the class of service and other restrictions.

The moves illustrate how airlines are doing anything they can to cut costs and increase revenue as they struggle to cope with record jet fuel prices. The fee increases follow similar actions taken by other major carriers in recent months.

“Our fuel costs have more than doubled in the past year,” Douglas Steenland, Northwest’s chief executive and president, said in a statement. “In order to manage through this unprecedented fuel challenge, we have to take action to both control costs and increase our revenue.”

Altogether, the new and increased fees are expected to generate $250 million to $300 million a year for the airline.

The job reductions will affect both management and frontline workers, including all employee groups, the airline said. Northwest hopes to achieve the job cuts through early-out programs, voluntary leaves and other measures. But furloughs could occur if not enough workers take these voluntary offers, the carrier warned.

To increase revenues, Northwest will begin charging customers $15 for their first checked bag for tickets sold on or after Thursday for travel starting Aug. 28 for flights throughout the United States as well as travel between the United States and Canada.

Members of the airline’s frequent flier elite membership program and passengers paying full fares are exempt from the charges. Earlier this year, Northwest began charging customers $25 for their second checked bag and $100 for three or more checked bags. Those fees will remain the same.

Free tickets on Northwest will also become a thing of the past — at least for now. For frequent flier award tickets issued in North America on or after Sept. 15, travelers will have to pay a $25 service fee on domestic tickets, $50 for trans-Atlantic tickets and $100 for trans-Pacific tickets.

Steenland described the fee as “temporary” and said Northwest will revisit the issue when jet fuel prices come down.

Contact KATHERINE YUNG at 313-222-8763 or kyung@freepress.com.

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